GM Europe Losses Mount As Possible Opel Spin-off Looms
February 26 2009 - 9:39AM
Dow Jones News
General Motors Corp.'s (GM) European division Thursday posted a
$1.9 billion fourth-quarter loss and sharply lower production, as
talks over the need for state aid and a possible spin-off of its
Opel unit intensified in Germany.
The European division - which includes Opel in Germany, Vauxhall
in the U.K. and Saab in Sweden - contributed to a $9.6 billion net
loss at the parent company, as sinking sales outweighed the
positive impact of U.S. government aid.
GM Europe's loss widened to $1.9 billion, from $445 million a
year earlier, with the auto maker blaming lower volumes across the
region, an unfavorable model mix which saw it lose market share, as
well as unfavorable foreign exchange and commodity hedging.
Fourth-quarter revenue in Europe fell to $6.4 billion, from
$10.7 billion in the same period in 2007, as its market share
dropped to 9.1% from 9.2% in a sharply contracting market.
GM's production in the quarter fell across all regions, but the
contraction in Europe was most marked. Production was just 214,000
vehicles, compared with 457,000 vehicles a year earlier as it cut
shifts and closed plants for long periods.
GM Europe reported a loss of $2.8 billion for the whole of 2008,
compared with a loss of $524 million in 2007. Production was 1.55
million vehicles, down from 1.83 million.
The news comes as Germany's economics minister prepares to meet
with the heads of the German states on Saturday to discuss possible
state aid for Opel, GM's largest European unit.
Earlier Thursday, Karl-Theodor zu Guttenberg told reporters that
Saturday's meeting with governors of states that have Opel plants
will follow a Friday meeting of the Opel board of directors, who
will discuss possible restructuring models and Opel's future ties
to GM.
Last week, GM Europe said that market conditions have
deteriorated dramatically since it asked for German aid for Opel in
November, suggesting it may need significantly higher guarantees
than anticipated at the time.
Opel needs at least EUR3.3 billion in capital to survive and
become less dependent on GM, Armin Schild, a member of Opel's
board, said last week.
GM has indicated that it is open to selling a stake in Opel, and
German politicians are under pressure from workers to bailout the
car maker to help save 25,000 jobs, a number that more than doubles
when including parts suppliers and other Opel-linked companies.
Thousands of Opel workers staged street demonstrations Thursday to
keep up political pressure for a state bailout, and they were
joined by Vauxhall and Saab workers.
But German policy makers so far have been divided over the state
taking a stake in Opel, with Chancellor Angela Merkel saying that
possible liquidity guarantees would be the right tool the help
companies like Opel.
Saab's own management has already put the brand into Sweden's
equivalent of Chapter 11 and pledged to emerge as an independent
Swedish car maker separate from GM.
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com
(Beate Preuschoff, Andrea Thomas and Roman Kessler contributed
to this article.)